China's Cyberassault on America. By RICHARD CLARKE
If we discovered Chinese explosives laid throughout our national electrical system, we'd consider it an act of war. China's digital bombs pose as grave a threat.
The Wall Street Journal, Wednesday, June 15, 2011
http://online.wsj.com/article/SB10001424052702304259304576373391101828876.html
In justifying U.S. involvement in Libya, the Obama administration cited the "responsibility to protect" citizens of other countries when their governments engage in widespread violence against them. But in the realm of cyberspace, the administration is ignoring its primary responsibility to protect its own citizens when they are targeted for harm by a foreign government.
Senior U.S. officials know well that the government of China is systematically attacking the computer networks of the U.S. government and American corporations. Beijing is successfully stealing research and development, software source code, manufacturing know-how and government plans. In a global competition among knowledge-based economies, Chinese cyberoperations are eroding America's advantage.
The Chinese government indignantly denies these charges, claiming that the attackers are nongovernmental Chinese hackers, or other governments pretending to be China, or that the attacks are fictions generated by anti-Chinese elements in the United States. Experts in the U.S. and allied governments find these denials hard to believe.
Three years ago, the head of the British Security Service wrote to hundreds of corporate chief executive officers in the U.K. to advise them that their companies had in all probability been hacked by the government of China. Neither the FBI nor the Department of Homeland Security has issued such a notice to U.S. executives, but most corporate leaders already know it.
Some, like Google, have the courage to admit that they have been the victims of Chinese hacking. We now know that the "Aurora" attack (so named by the U.S. government because the English word appears in the attack software) against Google in 2009 also hit dozens of other information technology companies—allegedly including Adobe, Juniper and Cisco—seeking their source code. Aurora wasn't an isolated event. This month Google renewed its charge against China, noting that the Gmail accounts of senior U.S. officials had been compromised from a server in China. The targeting of specific U.S. officials is not something that a mere hacker gang could do.
The Aurora attacks were followed by systematic penetrations of one industry after another. In the so-called Night Dragon series, attackers apparently in China went after major oil and gas companies, not only in the U.S. but throughout the world. The German government claims that the personal computer of Chancellor Angela Merkel was hacked by the Chinese government. Australia has also claimed that its prime minister was targeted by Chinese hackers.
Recently the computer-security company RSA (a division of EMC) was penetrated by an intrusion which appears to have stolen the secret sauce behind the company's SecureID. That system is widely used to protect critical computer networks. And this month, the largest U.S. defense contractor, Lockheed, was subject to cyberespionage, apparently by someone using the stolen RSA data. Cyber criminals don't hack defense contractors—they go after banks and credit cards. Despite Beijing's public denials, this attack and many others have all the hallmarks of Chinese government operations.
In 2009, this newspaper reported that the control systems for the U.S. electric power grid had been hacked and secret openings created so that the attacker could get back in with ease. Far from denying the story, President Obama publicly stated that "cyber intruders have probed our electrical grid."
There is no money to steal on the electrical grid, nor is there any intelligence value that would justify cyber espionage: The only point to penetrating the grid's controls is to counter American military superiority by threatening to damage the underpinning of the U.S. economy. Chinese military strategists have written about how in this way a nation like China could gain an equal footing with the militarily superior United States.
What would we do if we discovered that Chinese explosives had been laid throughout our national electrical system? The public would demand a government response. If, however, the explosive is a digital bomb that could do even more damage, our response is apparently muted—especially from our government.
Congress hasn't passed a single piece of significant cybersecurity legislation. When the Chinese deny senior U.S. officials' claims (made in private) that Beijing is stealing terabytes of data in the U.S., Congress should not leave the American people in doubt. It should demand answers to basic questions:
What does the administration know about the role of the Chinese government in cyberattacks on public and private computer networks in the United States?
If there is widespread Chinese hacking of sensitive U.S. networks and critical infrastructure, what has the administration said about it to the Chinese government? Specifically, did President Obama raise concerns about these attacks with Chinese President Hu Jintao at the White House this spring?
Since defensive measures such as antivirus software and firewalls appear unable to stop the Chinese penetrations, does the administration have any plan to address these cyberattacks?
In private, U.S. officials admit that the government has no strategy to stop the Chinese cyberassault. Rather than defending American companies, the Pentagon seems focused on "active defense," by which it means offense. That cyberoffense might be employed if China were ever to launch a massive cyberwar on the U.S. But in the daily guerrilla cyberwar with China, our government is engaged in defending only its own networks. It is failing in its responsibility to protect the rest of America from Chinese cyberattack.
Mr. Clarke was a national security official in the White House for three presidents. He is chairman of Good Harbor Consulting, a security risk management consultancy for governments and corporations.
Thursday, June 16, 2011
Saturday, May 28, 2011
World Bank on MENA: Opportunities To Reshape Economic Playing Field
World Bank on MENA: Opportunities To Reshape Economic Playing Field
There are historic opportunities for greater openness and citizen participation in economies across the Middle East and North Africa (MENA) that, if strongly managed over the transitions ahead, could see a significant boost to economic growth and living standards in the medium term.
This is the analysis presented on My 24, 2011 in the World Bank’s Regional Economic Outlook: MENA Facing Challenges and Opportunities. The report notes that current economic disruption in many MENA countries is translating into lower growth in the short term (now forecast at 3.6 percent for 2011 down from 5 percent) but that opportunities in the medium term offer new hope for an inclusive and sustainable development that has not before been seen in the region.
"The rich experience from countries that have undergone political changes suggest that short-term disruptions to economic growth and social tensions are inevitable,” said Shamshad Akhtar, World Bank Vice President for the MENA region. “However, transition offers an opportunity for countries to break with the past and set course in a newer direction. A first order of priority is to offer the right signals to restore public and private investor confidence which, in MENA, calls for ensuring respect and citizen dignity through inclusive social policies, a fundamental change in governance frameworks and swiftly restoring macroeconomic stability."
The report finds that by the end of 2010, MENA countries had largely recovered from the global financial crisis, and growth rates had been expected to reach pre-crisis levels in 2011. Events in early 2011 which led to swift regime change in Tunisia and Egypt, and ongoing challenges in Bahrain, Libya, Syria and Yemen, have affected the short-term macroeconomic outlook and the status and speed of economic reforms in the region.
“The effects of reform tend to follow a J-curve, where things get worse before they get better. Experience from other countries which have made successful transitions has shown an initial decline of 3 to 4 percent in the first year but quickly recovering,” said Caroline Freund, Chief Economist for the MENA region.
“Also encouraging is that successful countries saw significant and fast improvements in voice and accountability, some of the very things that underpin the MENA uprisings. We need to learn from history’s successful transitions and carefully manage the short-term downturn which is where we are focusing our best efforts now. While the challenges are many, the opportunities are more."
Freund said better rule of law will promote competition and political stability will attract investment, facilitating more rapid growth in a sustainable way. By the same token, more voice for civil society will prevent the unequal application of regulations, and can lead to more inclusive growth.
Examples of transitions to democracy in other parts of the world confirm that economic gains can be sizable. Typically, successful transitions are associated with higher levels of income growth in the decade after change than in the prior one. But, the short-run is challenging; investors typically wait for uncertainty to be resolved and it is inevitable that investment will be delayed. Signs of stability and reform are quick to be rewarded though and evidence from other countries shows that this dip in economic activity typically lasts a year, with growth quickly gaining momentum if the transition is strongly managed.
The report’s regional forecast of 3.6 percent growth for 2011, down from 5 percent expected a few months ago, is largely due to the sharp drop in Egypt’s and Tunisia’s economic activity, but also because of weaker growth in developing oil exporters in MNA. Gulf Cooperation Council (GCC) countries will maintain strong growth rates, expected to exceed 5 percent. Growth effects are sharply differentiated by country in MENA, depending largely on whether the country is an oil exporter or an oil importer and the degree to which unrest and political change has disrupted economic activity.
The report also notes that government spending is expected to rise in 2011 as governments move to expanding supportive policy measures and social transfers to reduce the burden of unemployment and counter high commodity prices. Partly because of these actions, but also because of rising fuel and food prices, inflation rates are expected to increase in many MENA countries in 2011.
“Expanding social measures during an uncertain period is understandable to protect the most vulnerable and to help maintain support for reform,” said Elena Ianchovichina, World Bank Lead Economist and author of the report. “But it is important that these measures be used to complement needed reforms and be targeted efficiently to the poorest and the most needy.”
The report considers prolonged instability resulting from unmet political and social aspirations and lack of clarity about political transitions to be the most serious risk to short-term economic growth in MENA.
The report also investigates the effect of high commodity prices on MENA countries. Impacts are country-specific and determined by dependence on food and oil imports, and the extent of the pass-through from international to domestic prices. While MENA includes some major oil exporters that are benefiting from oil price increases, it is also home to a number of countries that rely on imported oil. Importantly, because most MENA countries are highly dependent on imported food, particularly cereals, oils, and sugar, in the event of further food price increases, they face the risk of more malnutrition, increased import bills, higher domestic inflation, and worsened fiscal balances in cases when governments subsidize food. And new estimates of pass through from international food prices to domestic prices are presented for MENA countries.
“Food security is and will continue to be an important issue for Arab countries,” said Julian Lampietti, Lead Food Security Expert for MENA region at the World Bank. “Now is not the time to be complacent in addressing this with global wheat stocks low and with the Arab world importing one third of the world’s traded wheat.” There is considerable scope for reducing food price volatility in the MENA region through investments in infrastructure and logistics, he said, pointing to examples in the region where ongoing analysis is showing that there are ways to manage exposure to food price spikes and ensure a timely supply of dietary essentials.
This press release is downloadable here: http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:22922472~pagePK:64257043~piPK:437376~theSitePK:4607,00.html
Full report on http://siteresources.worldbank.org/MENAEXT/Resources/EDP_MNA_2011.pdf
There are historic opportunities for greater openness and citizen participation in economies across the Middle East and North Africa (MENA) that, if strongly managed over the transitions ahead, could see a significant boost to economic growth and living standards in the medium term.
This is the analysis presented on My 24, 2011 in the World Bank’s Regional Economic Outlook: MENA Facing Challenges and Opportunities. The report notes that current economic disruption in many MENA countries is translating into lower growth in the short term (now forecast at 3.6 percent for 2011 down from 5 percent) but that opportunities in the medium term offer new hope for an inclusive and sustainable development that has not before been seen in the region.
"The rich experience from countries that have undergone political changes suggest that short-term disruptions to economic growth and social tensions are inevitable,” said Shamshad Akhtar, World Bank Vice President for the MENA region. “However, transition offers an opportunity for countries to break with the past and set course in a newer direction. A first order of priority is to offer the right signals to restore public and private investor confidence which, in MENA, calls for ensuring respect and citizen dignity through inclusive social policies, a fundamental change in governance frameworks and swiftly restoring macroeconomic stability."
The report finds that by the end of 2010, MENA countries had largely recovered from the global financial crisis, and growth rates had been expected to reach pre-crisis levels in 2011. Events in early 2011 which led to swift regime change in Tunisia and Egypt, and ongoing challenges in Bahrain, Libya, Syria and Yemen, have affected the short-term macroeconomic outlook and the status and speed of economic reforms in the region.
“The effects of reform tend to follow a J-curve, where things get worse before they get better. Experience from other countries which have made successful transitions has shown an initial decline of 3 to 4 percent in the first year but quickly recovering,” said Caroline Freund, Chief Economist for the MENA region.
“Also encouraging is that successful countries saw significant and fast improvements in voice and accountability, some of the very things that underpin the MENA uprisings. We need to learn from history’s successful transitions and carefully manage the short-term downturn which is where we are focusing our best efforts now. While the challenges are many, the opportunities are more."
Freund said better rule of law will promote competition and political stability will attract investment, facilitating more rapid growth in a sustainable way. By the same token, more voice for civil society will prevent the unequal application of regulations, and can lead to more inclusive growth.
Examples of transitions to democracy in other parts of the world confirm that economic gains can be sizable. Typically, successful transitions are associated with higher levels of income growth in the decade after change than in the prior one. But, the short-run is challenging; investors typically wait for uncertainty to be resolved and it is inevitable that investment will be delayed. Signs of stability and reform are quick to be rewarded though and evidence from other countries shows that this dip in economic activity typically lasts a year, with growth quickly gaining momentum if the transition is strongly managed.
The report’s regional forecast of 3.6 percent growth for 2011, down from 5 percent expected a few months ago, is largely due to the sharp drop in Egypt’s and Tunisia’s economic activity, but also because of weaker growth in developing oil exporters in MNA. Gulf Cooperation Council (GCC) countries will maintain strong growth rates, expected to exceed 5 percent. Growth effects are sharply differentiated by country in MENA, depending largely on whether the country is an oil exporter or an oil importer and the degree to which unrest and political change has disrupted economic activity.
The report also notes that government spending is expected to rise in 2011 as governments move to expanding supportive policy measures and social transfers to reduce the burden of unemployment and counter high commodity prices. Partly because of these actions, but also because of rising fuel and food prices, inflation rates are expected to increase in many MENA countries in 2011.
“Expanding social measures during an uncertain period is understandable to protect the most vulnerable and to help maintain support for reform,” said Elena Ianchovichina, World Bank Lead Economist and author of the report. “But it is important that these measures be used to complement needed reforms and be targeted efficiently to the poorest and the most needy.”
The report considers prolonged instability resulting from unmet political and social aspirations and lack of clarity about political transitions to be the most serious risk to short-term economic growth in MENA.
The report also investigates the effect of high commodity prices on MENA countries. Impacts are country-specific and determined by dependence on food and oil imports, and the extent of the pass-through from international to domestic prices. While MENA includes some major oil exporters that are benefiting from oil price increases, it is also home to a number of countries that rely on imported oil. Importantly, because most MENA countries are highly dependent on imported food, particularly cereals, oils, and sugar, in the event of further food price increases, they face the risk of more malnutrition, increased import bills, higher domestic inflation, and worsened fiscal balances in cases when governments subsidize food. And new estimates of pass through from international food prices to domestic prices are presented for MENA countries.
“Food security is and will continue to be an important issue for Arab countries,” said Julian Lampietti, Lead Food Security Expert for MENA region at the World Bank. “Now is not the time to be complacent in addressing this with global wheat stocks low and with the Arab world importing one third of the world’s traded wheat.” There is considerable scope for reducing food price volatility in the MENA region through investments in infrastructure and logistics, he said, pointing to examples in the region where ongoing analysis is showing that there are ways to manage exposure to food price spikes and ensure a timely supply of dietary essentials.
This press release is downloadable here: http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:22922472~pagePK:64257043~piPK:437376~theSitePK:4607,00.html
Full report on http://siteresources.worldbank.org/MENAEXT/Resources/EDP_MNA_2011.pdf
Wednesday, May 25, 2011
“The Day of Rejection” in Mauritania
Kal posts this:
"For pictures, flyers, video and a summary of the 24 May youth demonstrations in Mauritania (The Day of Rejection), see here and here. The youth staged a mock funeral for democracy in Mauritania, marching on the Blokate square in Nouakchott. As in previous demonstrations, there was an emphasis on reducing the military’s role in politics, corruption and commodity prices. The demonstrators were met by plain cloths police and security men, who allegedly distributed knives to thugs. The demonstrations on 24 May were smaller than in April and saw less head on violence from the authorities. But the government does appear somewhat spooked by the youth movement: aside from the use of plain clothes police and agents provocateurs, it has used misinformation campaigns to confuse and hamper the protests with false flyers (and by setting up false Facebook accounts and pages, according to activists). Here is a link to an al-Akhbar article on the demonstration [Ar.]. For background on the youth protest movement see the previous posts on this blog and this writer’s recent article in the Arab Reform Bulletin."
Here is one flyer, "posted by organizers on Facebook and by this writer on Twitter last week (they are also in a gallery in the links above)":
There is a second flyer in Arabic at the original post.
"For pictures, flyers, video and a summary of the 24 May youth demonstrations in Mauritania (The Day of Rejection), see here and here. The youth staged a mock funeral for democracy in Mauritania, marching on the Blokate square in Nouakchott. As in previous demonstrations, there was an emphasis on reducing the military’s role in politics, corruption and commodity prices. The demonstrators were met by plain cloths police and security men, who allegedly distributed knives to thugs. The demonstrations on 24 May were smaller than in April and saw less head on violence from the authorities. But the government does appear somewhat spooked by the youth movement: aside from the use of plain clothes police and agents provocateurs, it has used misinformation campaigns to confuse and hamper the protests with false flyers (and by setting up false Facebook accounts and pages, according to activists). Here is a link to an al-Akhbar article on the demonstration [Ar.]. For background on the youth protest movement see the previous posts on this blog and this writer’s recent article in the Arab Reform Bulletin."
Here is one flyer, "posted by organizers on Facebook and by this writer on Twitter last week (they are also in a gallery in the links above)":
There is a second flyer in Arabic at the original post.
Saturday, May 14, 2011
Analysts say GCC inclusion of Jordan, Morocco will strengthen Arab integration
Analysts say GCC inclusion of Jordan, Morocco will strengthen Arab integration
May 14, 2011
BBC Monitoring Middle East
["Today's Harvest" news programme on GCC's invitation to Morocco to join the GCC, and Jordan's request to join the GCC; Saudi Consultative Council member, Jordanian government spokesman, and Moroccan Socialist Unified Party member interviewed - live.]
Doha Al-Jazeera Satellite Channel Television in Arabic at 2001 GMT on 10 May carries within its "Today's Harvest" news programme a 200-second report on the GCC consultative summit held in Riyadh on 10 May, an approximately six-minute interview with Zuhayr al-Harithi, member of the Saudi Arabia's Consultative (Shura) Council, in the Doha studio; followed by a four-minute interview with Tahir al-Adwan, Jordan's minister of state for media affairs and communication and official spokesman of the Jordanian government, via telephone from Amman; and a four-minute interview with Hassan Tarik, member of the Political Bureau of Morocco's Socialist Unified Party, SUP, via telephone from Rabat. The interviews are conducted from Doha by anchors Khadijah Bin-Qinnah and Muhammad al-Kurayshan.
Al-Jazeera reports on the consultative summit held by the heads of the six Gulf Cooperation Council [GCC] states - or their representatives - in Riyadh on 10 May during which they discussed the situation in Yemen and Bahrain and the tense relations with Iran.
Al-Jazeera reports that GCC Secretary General Abd-al-Latif al-Zayani said the GCC Supreme Council delegated its foreign ministers to initiate talks with Rabat on Morocco joining the GCC, while the GCC leaders "welcomed Jordan's request to join the GCC, and promised to study the request."
Al-Jazeera then carries a video report by an unidentified correspondent on the summit. Video shows scenes from the summit, beginning with the Saudi monarch walking with the help of a stick, surrounded by Saudi and other GCC dignitaries. The correspondent notes that the summit coincides with "a big deterioration in the GCC states' relations with Iran, in the wake of recent protests in Bahrain," adding that Iran was unhappy with Bahrain's request for the assistance of the Peninsula Shield Force to end the disturbances.
The correspondent adds that the GCC states are becoming increasingly worried by the continuing crisis in Yemen where huge demonstrations are held daily to demand President Salih's departure. Al-Jazeera's correspondent adds that the GCC summit sent a delegation to meet with Syrian President Al-Asad, and the director of the Gulf Research Centre in Dubai has revealed that the GCC will not mediate in the Syrian situation, but it may have proffered advice to Al-Asad and stressed to him that the "security solution is not the only solution, and reforms are essential."
Bin-Qinnah then asks Al-Harithi about the GCC's "surprise move" in welcoming Jordan's request to join the GCC and inviting Morocco to join, Al-Harithi says "the picture is not quite clear yet." He explains that the move stems from "the GCC's desire to establish a bloc that represents a political stand, and an economic bloc that gives momentum to the GCC. The political systems in all those countries are similar: they are monarchies, and their political stands are also similar." Asked if he is referring to stands towards Iran, Al-Harithi says Iran and other issues. He says it is a "good move, because we are talking about the globalization age, which requires the creation of blocs that achieve economic integration."
Asked whether his assertion about the political systems of the GCC, Jordan, and Morocco being similar explains why the GCC had rejected past requests to join the GCC, Al-Harithi disagrees and says Yemen has begun preparations to qualify, adding: "I think it will join soon."
Al-Harithi says the GCC states are facing regional and domestic challenges, and they have certain demands, and the GCC states are wise to take such a far-sighted stand that could be helpful in the future. He says some states "are trying to exploit the present weakness of the Arab states, for we have seen some interference and some changes in the Arab political map."
Al-Harithi says he believes that since four months ago "the GCC embarked on a new stage" with regard to joint action and security and defence policies. He says the GCC's achievements continue to fall short of the aspirations of the peoples of the GCC states, and the GCC has sensed the dangers of the present stage and wisely looked for ways out.
Told it is called a Gulf council, while Morocco is a long distance from the Gulf, Al-Harithi says if Morocco and Jordan join the GCC geographic location will no longer be so important, for the states' joint action, political stand, and economic integration will be more important. He says if the outcome of those two states joining the GCC is that Arab joint action will gain momentum that ultimately serves the Arab states.
Asked about Yemen's application to join the GCC, Al-Harithi says: "The problem is in the Yemeni court, where there is some stalling and procrastination on the part of the regime, while the opposition is being intransigent and is taking a hard-line operation." He urges the Yemenis to seize this opportunity for it is "a road map to find a solution.
Al-Harithi says the GCC initiative because it will spare the Yemeni people's blood, achieve their demands, and lead to respect for the options of the Yemeni people. He adds: "The GCC states are neither backing the Yemeni president, nor siding with the Yemeni opposition, but seek to consolidate Yemen's stability and security." Al-Harithi adds: Yemen's security is a strategic matter. It is linked to the security system of the GCC as a whole."
Al-Kurayshan then interviews Jordan's Tahir al-Adwan. Al-Kurayshan begins by asking him how Jordan received the decisions of the GCC consultative summit. Al-Adwan says: "The Jordanian government issued a statement lauding the GCC summit's statement that welcomed Jordan's request to join the GCC. It is a big and important step for joint Arab action, and achieves the interests of the Arab peoples in this region. Amy step towards strengthening Jordanian-GCC relations is welcomed in Jordan, not only at the official level but at various popular levels as well." He notes Jordan's strong and longstanding relations with the GCC states where, he says, many Jordanians are employed.
Asked what does Jordan hope to achieve by joining the GCC, Al-Adwan says: "Such a step serves the interests of Jordan and also serves joint Arab action. It strengthens Arab integration and cooperation in economic fields, and bolsters the ties and contacts between the peoples of the region."
Seeking a more specific answer, Al-Kurayshan says why does Jordan apply to join the GCC which had so far been a club exclusively for Gulf states, Al-Adwan says: "It has been a longstanding ambition of Jordan to join the GCC. You may recall that in recent weeks when the king went on a tour, and the prime minister also went on a tour of the Gulf states, there were reports on the possibility of Jordan joining the GCC. The report was well received by Jordanian public opinion. I believe Jordan has constantly aspired to join the GCC, which is a very big step for Jordan. It is a welcome move. Certainly, Jordanians will feel that new horizons have been opened to cooperation between Jordan and the peoples and states of the GCC. It is in Jordan's interest. As you know, Jordan faces difficult economic circumstances. The entire region is suffering from unrest and instability."
Al-Adwan adds: "Now any step towards bolstering joint Arab action on various levels represents a ray of hope for the peoples of the region."
Bin-Qinnah then interviews Hasan Tarik, of Morocco's SUP. Asked how did Morocco receive the GCC's invitation to join the GCC, Tarik says Moroccan public opinion was surprised by the invitation, both because Morocco is more oriented towards the Arab Maghreb and the West, and because the GCC is a closed club. Tariq notes that not all the facts are known, and the reports are conflicting, for there are those who say Morocco has officially applied to join the GCC, while there are those who say that Mo rocco was invited by the GCC to join it. He adds that there had been no previous public discussions on the issue. He says there will be questions regarding the effect of such a move on Morocco's relations with other Maghreb and Mediterranean states. [Video shows King Hamad of Bahrain sitting and listening to other GCC leaders]
Asked how would Morocco's relations with other Arab Maghreb states conflict with its relations with GCC states, Tarik says the political stands of Morocco and the GCC states have always been close, and there was clear economic support for Morocco. He adds: "However, for those relations to go as far as Morocco joining the GCC represents a shift in Morocco's foreign policy. The fear is that, in the light of the political transformations that have been occurring in the Arab region, the bid to join the GCC will be construed as a return to the policy of axes. There is also a fear that it will be viewed as the last nail in the coffin of the Arab Regional Order. There are numerous questions that are being asked by Moroccan public opinion, but there are not enough appropriate answers to those questions."
Tarik says decisions on foreign policy are the prerogative of the state and the royal establishment, and adds: "However, it is hoped there will be a public debate on the issue and the options. Are we getting involved in a pragmatic and economic process? Does it have political significance and consequences? What is the cost? Why now? Those are all matters that require clarification?"
Source: Al-Jazeera TV, Doha, in Arabic 2001 gmt May 10, 2011
May 14, 2011
BBC Monitoring Middle East
["Today's Harvest" news programme on GCC's invitation to Morocco to join the GCC, and Jordan's request to join the GCC; Saudi Consultative Council member, Jordanian government spokesman, and Moroccan Socialist Unified Party member interviewed - live.]
Doha Al-Jazeera Satellite Channel Television in Arabic at 2001 GMT on 10 May carries within its "Today's Harvest" news programme a 200-second report on the GCC consultative summit held in Riyadh on 10 May, an approximately six-minute interview with Zuhayr al-Harithi, member of the Saudi Arabia's Consultative (Shura) Council, in the Doha studio; followed by a four-minute interview with Tahir al-Adwan, Jordan's minister of state for media affairs and communication and official spokesman of the Jordanian government, via telephone from Amman; and a four-minute interview with Hassan Tarik, member of the Political Bureau of Morocco's Socialist Unified Party, SUP, via telephone from Rabat. The interviews are conducted from Doha by anchors Khadijah Bin-Qinnah and Muhammad al-Kurayshan.
Al-Jazeera reports on the consultative summit held by the heads of the six Gulf Cooperation Council [GCC] states - or their representatives - in Riyadh on 10 May during which they discussed the situation in Yemen and Bahrain and the tense relations with Iran.
Al-Jazeera reports that GCC Secretary General Abd-al-Latif al-Zayani said the GCC Supreme Council delegated its foreign ministers to initiate talks with Rabat on Morocco joining the GCC, while the GCC leaders "welcomed Jordan's request to join the GCC, and promised to study the request."
Al-Jazeera then carries a video report by an unidentified correspondent on the summit. Video shows scenes from the summit, beginning with the Saudi monarch walking with the help of a stick, surrounded by Saudi and other GCC dignitaries. The correspondent notes that the summit coincides with "a big deterioration in the GCC states' relations with Iran, in the wake of recent protests in Bahrain," adding that Iran was unhappy with Bahrain's request for the assistance of the Peninsula Shield Force to end the disturbances.
The correspondent adds that the GCC states are becoming increasingly worried by the continuing crisis in Yemen where huge demonstrations are held daily to demand President Salih's departure. Al-Jazeera's correspondent adds that the GCC summit sent a delegation to meet with Syrian President Al-Asad, and the director of the Gulf Research Centre in Dubai has revealed that the GCC will not mediate in the Syrian situation, but it may have proffered advice to Al-Asad and stressed to him that the "security solution is not the only solution, and reforms are essential."
Bin-Qinnah then asks Al-Harithi about the GCC's "surprise move" in welcoming Jordan's request to join the GCC and inviting Morocco to join, Al-Harithi says "the picture is not quite clear yet." He explains that the move stems from "the GCC's desire to establish a bloc that represents a political stand, and an economic bloc that gives momentum to the GCC. The political systems in all those countries are similar: they are monarchies, and their political stands are also similar." Asked if he is referring to stands towards Iran, Al-Harithi says Iran and other issues. He says it is a "good move, because we are talking about the globalization age, which requires the creation of blocs that achieve economic integration."
Asked whether his assertion about the political systems of the GCC, Jordan, and Morocco being similar explains why the GCC had rejected past requests to join the GCC, Al-Harithi disagrees and says Yemen has begun preparations to qualify, adding: "I think it will join soon."
Al-Harithi says the GCC states are facing regional and domestic challenges, and they have certain demands, and the GCC states are wise to take such a far-sighted stand that could be helpful in the future. He says some states "are trying to exploit the present weakness of the Arab states, for we have seen some interference and some changes in the Arab political map."
Al-Harithi says he believes that since four months ago "the GCC embarked on a new stage" with regard to joint action and security and defence policies. He says the GCC's achievements continue to fall short of the aspirations of the peoples of the GCC states, and the GCC has sensed the dangers of the present stage and wisely looked for ways out.
Told it is called a Gulf council, while Morocco is a long distance from the Gulf, Al-Harithi says if Morocco and Jordan join the GCC geographic location will no longer be so important, for the states' joint action, political stand, and economic integration will be more important. He says if the outcome of those two states joining the GCC is that Arab joint action will gain momentum that ultimately serves the Arab states.
Asked about Yemen's application to join the GCC, Al-Harithi says: "The problem is in the Yemeni court, where there is some stalling and procrastination on the part of the regime, while the opposition is being intransigent and is taking a hard-line operation." He urges the Yemenis to seize this opportunity for it is "a road map to find a solution.
Al-Harithi says the GCC initiative because it will spare the Yemeni people's blood, achieve their demands, and lead to respect for the options of the Yemeni people. He adds: "The GCC states are neither backing the Yemeni president, nor siding with the Yemeni opposition, but seek to consolidate Yemen's stability and security." Al-Harithi adds: Yemen's security is a strategic matter. It is linked to the security system of the GCC as a whole."
Al-Kurayshan then interviews Jordan's Tahir al-Adwan. Al-Kurayshan begins by asking him how Jordan received the decisions of the GCC consultative summit. Al-Adwan says: "The Jordanian government issued a statement lauding the GCC summit's statement that welcomed Jordan's request to join the GCC. It is a big and important step for joint Arab action, and achieves the interests of the Arab peoples in this region. Amy step towards strengthening Jordanian-GCC relations is welcomed in Jordan, not only at the official level but at various popular levels as well." He notes Jordan's strong and longstanding relations with the GCC states where, he says, many Jordanians are employed.
Asked what does Jordan hope to achieve by joining the GCC, Al-Adwan says: "Such a step serves the interests of Jordan and also serves joint Arab action. It strengthens Arab integration and cooperation in economic fields, and bolsters the ties and contacts between the peoples of the region."
Seeking a more specific answer, Al-Kurayshan says why does Jordan apply to join the GCC which had so far been a club exclusively for Gulf states, Al-Adwan says: "It has been a longstanding ambition of Jordan to join the GCC. You may recall that in recent weeks when the king went on a tour, and the prime minister also went on a tour of the Gulf states, there were reports on the possibility of Jordan joining the GCC. The report was well received by Jordanian public opinion. I believe Jordan has constantly aspired to join the GCC, which is a very big step for Jordan. It is a welcome move. Certainly, Jordanians will feel that new horizons have been opened to cooperation between Jordan and the peoples and states of the GCC. It is in Jordan's interest. As you know, Jordan faces difficult economic circumstances. The entire region is suffering from unrest and instability."
Al-Adwan adds: "Now any step towards bolstering joint Arab action on various levels represents a ray of hope for the peoples of the region."
Bin-Qinnah then interviews Hasan Tarik, of Morocco's SUP. Asked how did Morocco receive the GCC's invitation to join the GCC, Tarik says Moroccan public opinion was surprised by the invitation, both because Morocco is more oriented towards the Arab Maghreb and the West, and because the GCC is a closed club. Tariq notes that not all the facts are known, and the reports are conflicting, for there are those who say Morocco has officially applied to join the GCC, while there are those who say that Mo rocco was invited by the GCC to join it. He adds that there had been no previous public discussions on the issue. He says there will be questions regarding the effect of such a move on Morocco's relations with other Maghreb and Mediterranean states. [Video shows King Hamad of Bahrain sitting and listening to other GCC leaders]
Asked how would Morocco's relations with other Arab Maghreb states conflict with its relations with GCC states, Tarik says the political stands of Morocco and the GCC states have always been close, and there was clear economic support for Morocco. He adds: "However, for those relations to go as far as Morocco joining the GCC represents a shift in Morocco's foreign policy. The fear is that, in the light of the political transformations that have been occurring in the Arab region, the bid to join the GCC will be construed as a return to the policy of axes. There is also a fear that it will be viewed as the last nail in the coffin of the Arab Regional Order. There are numerous questions that are being asked by Moroccan public opinion, but there are not enough appropriate answers to those questions."
Tarik says decisions on foreign policy are the prerogative of the state and the royal establishment, and adds: "However, it is hoped there will be a public debate on the issue and the options. Are we getting involved in a pragmatic and economic process? Does it have political significance and consequences? What is the cost? Why now? Those are all matters that require clarification?"
Source: Al-Jazeera TV, Doha, in Arabic 2001 gmt May 10, 2011
Sunday, March 20, 2011
Leadership substitutes and personality impact on time and quality in some projects
Leadership substitutes and personality impact on time and quality in virtual new product development projects / Kenneth David Strang
Article first published online: Sep 29, 2010 - DOI: 10.1002/pmj.20208
Keywords:
- virtual product development;
- transformational transactional leadership;
- leadership substitutes;
- personality;
- competencies;
- time performance;
- scope quality
Abstract
Leadership, personality, and organizational factors were analyzed to measure their combined effect on virtual-based product development time and scope-quality performance. Over 1,000 team members were surveyed. MANCOVA was used to test if leadership, personality project, and/or organizational factors impacted performance. All realistic factors were included to detect leadership substitutes moderation, mediation, and prediction. Bias was reduced by not surveying leaders, by using reverse item coding, and by checking social desirability. Experimental control and common method variance were managed by including multilevel and multisource data. Performance was objectively computed from organizational data. The findings were that transactional leadership (not transformational) and some personality attri-butes (leader substitutes) were significant factors, increasing project scope quality and time performance. This article was published online on September 29, 2010. An error was subsequently identified. This notice is included in the online and print versions to indicate that both have been corrected. See the correction noted on the seventh page of the print version of the article.
Friday, February 4, 2011
More than 90% of Egyptians hold their property without legal title. No wonder they can't build wealth.
Egypt's Economic Apartheid. By Hernando de Soto
More than 90% of Egyptians hold their property without legal title. No wonder they can't build wealth and have lost hope.
WSJ, Feb 03, 2011
http://online.wsj.com/article/SB10001424052748704358704576118683913032882.html
The headline that appeared on Al Jazeera on Jan. 14, a week before Egyptians took to the streets, affirmed that "[t]he real terror eating away at the Arab world is socio-economic marginalization."
The Egyptian government has long been concerned about the consequences of this marginalization. In 1997, with the financial support of the U.S. Agency for International Development, the government hired my organization, the Institute for Liberty and Democracy. It wanted to get the numbers on how many Egyptians were marginalized and how much of the economy operated "extralegally"—that is, without the protections of property rights or access to normal business tools, such as credit, that allow businesses to expand and prosper. The objective was to remove the legal impediments holding back people and their businesses.
After years of fieldwork and analysis—involving over 120 Egyptian and Peruvian technicians with the participation of 300 local leaders and interviews with thousands of ordinary people—we presented a 1,000-page report and a 20-point action plan to the 11-member economic cabinet in 2004. The report was championed by Minister of Finance Muhammad Medhat Hassanein, and the cabinet approved its policy recommendations.
Egypt's major newspaper, Al Ahram, declared that the reforms "would open the doors of history for Egypt." Then, as a result of a cabinet shakeup, Mr. Hassanein was ousted. Hidden forces of the status quo blocked crucial elements of the reforms.
Today, when the streets are filled with so many Egyptians calling for change, it is worth noting some of the key facts uncovered by our investigation and reported in 2004:
• Egypt's underground economy was the nation's biggest employer. The legal private sector employed 6.8 million people and the public sector employed 5.9 million, while 9.6 million people worked in the extralegal sector.
• As far as real estate is concerned, 92% of Egyptians hold their property without normal legal title.
• We estimated the value of all these extralegal businesses and property, rural as well as urban, to be $248 billion—30 times greater than the market value of the companies registered on the Cairo Stock Exchange and 55 times greater than the value of foreign direct investment in Egypt since Napoleon invaded—including the financing of the Suez Canal and the Aswan Dam. (Those same extralegal assets would be worth more than $400 billion in today's dollars.)
The entrepreneurs who operate outside the legal system are held back. They do not have access to the business organizational forms (partnerships, joint stock companies, corporations, etc.) that would enable them to grow the way legal enterprises do. Because such enterprises are not tied to standard contractual and enforcement rules, outsiders cannot trust that their owners can be held to their promises or contracts. This makes it difficult or impossible to employ the best technicians and professional managers—and the owners of these businesses cannot issue bonds or IOUs to obtain credit.
Nor can such enterprises benefit from the economies of scale available to those who can operate in the entire Egyptian market. The owners of extralegal enterprises are limited to employing their kin to produce for confined circles of customers.
Without clear legal title to their assets and real estate, in short, these entrepreneurs own what I have called "dead capital"—property that cannot be leveraged as collateral for loans, to obtain investment capital, or as security for long-term contractual deals. And so the majority of these Egyptian enterprises remain small and relatively poor. The only thing that can emancipate them is legal reform. And only the political leadership of Egypt can pull this off. Too many technocrats have been trained not to expand the rule of law, but to defend it as they find it. Emancipating people from bad law and devising strategies to overcome the inertia of the status quo is a political job.
The key question to be asked is why most Egyptians choose to remain outside the legal economy? The answer is that, as in most developing countries, Egypt's legal institutions fail the majority of the people. Due to burdensome, discriminatory and just plain bad laws, it is impossible for most people to legalize their property and businesses, no matter how well intentioned they might be.
The examples are legion. To open a small bakery, our investigators found, would take more than 500 days. To get legal title to a vacant piece of land would take more than 10 years of dealing with red tape. To do business in Egypt, an aspiring poor entrepreneur would have to deal with 56 government agencies and repetitive government inspections.
All this helps explain who so many ordinary Egyptians have been "smoldering" for decades. Despite hard work and savings, they can do little to improve their lives.
Bringing the majority of Egypt's people into an open legal system is what will break Egypt's economic apartheid. Empowering the poor begins with the legal system awarding clear property rights to the $400 billion-plus of assets that we found they had created. This would unlock an amount of capital hundreds of times greater than foreign direct investment and what Egypt receives in foreign aid.
Leaders and governments may change and more democracy might come to Egypt. But unless its existing legal institutions are reformed to allow economic growth from the bottom up, the aspirations for a better life that are motivating so many demonstrating in the streets will remain unfulfilled.
Mr. de Soto, author of "The Mystery of Capital" (Basic Books, 2000) and "The Other Path" (Harper and Row, 1989), is president of the Institute for Liberty and Democracy based in Lima, Peru.
More than 90% of Egyptians hold their property without legal title. No wonder they can't build wealth and have lost hope.
WSJ, Feb 03, 2011
http://online.wsj.com/article/SB10001424052748704358704576118683913032882.html
The headline that appeared on Al Jazeera on Jan. 14, a week before Egyptians took to the streets, affirmed that "[t]he real terror eating away at the Arab world is socio-economic marginalization."
The Egyptian government has long been concerned about the consequences of this marginalization. In 1997, with the financial support of the U.S. Agency for International Development, the government hired my organization, the Institute for Liberty and Democracy. It wanted to get the numbers on how many Egyptians were marginalized and how much of the economy operated "extralegally"—that is, without the protections of property rights or access to normal business tools, such as credit, that allow businesses to expand and prosper. The objective was to remove the legal impediments holding back people and their businesses.
After years of fieldwork and analysis—involving over 120 Egyptian and Peruvian technicians with the participation of 300 local leaders and interviews with thousands of ordinary people—we presented a 1,000-page report and a 20-point action plan to the 11-member economic cabinet in 2004. The report was championed by Minister of Finance Muhammad Medhat Hassanein, and the cabinet approved its policy recommendations.
Egypt's major newspaper, Al Ahram, declared that the reforms "would open the doors of history for Egypt." Then, as a result of a cabinet shakeup, Mr. Hassanein was ousted. Hidden forces of the status quo blocked crucial elements of the reforms.
Today, when the streets are filled with so many Egyptians calling for change, it is worth noting some of the key facts uncovered by our investigation and reported in 2004:
• Egypt's underground economy was the nation's biggest employer. The legal private sector employed 6.8 million people and the public sector employed 5.9 million, while 9.6 million people worked in the extralegal sector.
• As far as real estate is concerned, 92% of Egyptians hold their property without normal legal title.
• We estimated the value of all these extralegal businesses and property, rural as well as urban, to be $248 billion—30 times greater than the market value of the companies registered on the Cairo Stock Exchange and 55 times greater than the value of foreign direct investment in Egypt since Napoleon invaded—including the financing of the Suez Canal and the Aswan Dam. (Those same extralegal assets would be worth more than $400 billion in today's dollars.)
The entrepreneurs who operate outside the legal system are held back. They do not have access to the business organizational forms (partnerships, joint stock companies, corporations, etc.) that would enable them to grow the way legal enterprises do. Because such enterprises are not tied to standard contractual and enforcement rules, outsiders cannot trust that their owners can be held to their promises or contracts. This makes it difficult or impossible to employ the best technicians and professional managers—and the owners of these businesses cannot issue bonds or IOUs to obtain credit.
Nor can such enterprises benefit from the economies of scale available to those who can operate in the entire Egyptian market. The owners of extralegal enterprises are limited to employing their kin to produce for confined circles of customers.
Without clear legal title to their assets and real estate, in short, these entrepreneurs own what I have called "dead capital"—property that cannot be leveraged as collateral for loans, to obtain investment capital, or as security for long-term contractual deals. And so the majority of these Egyptian enterprises remain small and relatively poor. The only thing that can emancipate them is legal reform. And only the political leadership of Egypt can pull this off. Too many technocrats have been trained not to expand the rule of law, but to defend it as they find it. Emancipating people from bad law and devising strategies to overcome the inertia of the status quo is a political job.
The key question to be asked is why most Egyptians choose to remain outside the legal economy? The answer is that, as in most developing countries, Egypt's legal institutions fail the majority of the people. Due to burdensome, discriminatory and just plain bad laws, it is impossible for most people to legalize their property and businesses, no matter how well intentioned they might be.
The examples are legion. To open a small bakery, our investigators found, would take more than 500 days. To get legal title to a vacant piece of land would take more than 10 years of dealing with red tape. To do business in Egypt, an aspiring poor entrepreneur would have to deal with 56 government agencies and repetitive government inspections.
All this helps explain who so many ordinary Egyptians have been "smoldering" for decades. Despite hard work and savings, they can do little to improve their lives.
Bringing the majority of Egypt's people into an open legal system is what will break Egypt's economic apartheid. Empowering the poor begins with the legal system awarding clear property rights to the $400 billion-plus of assets that we found they had created. This would unlock an amount of capital hundreds of times greater than foreign direct investment and what Egypt receives in foreign aid.
Leaders and governments may change and more democracy might come to Egypt. But unless its existing legal institutions are reformed to allow economic growth from the bottom up, the aspirations for a better life that are motivating so many demonstrating in the streets will remain unfulfilled.
Mr. de Soto, author of "The Mystery of Capital" (Basic Books, 2000) and "The Other Path" (Harper and Row, 1989), is president of the Institute for Liberty and Democracy based in Lima, Peru.
Thursday, February 3, 2011
Angola country report
Angola country report
1 US State Dept: Angola Briefing: http://www.state.gov/p/af/ci/ao/index.htm.
Economy:
Despite a fast-growing economy largely due to a major oil boom, Angola ranks in the bottom 10% of most socioeconomic indicators. The International Monetary Fund (IMF) estimates that Angola's real GDP increased by 16% in 2008. However, GDP growth in 2009 was flat due to significantly lower oil prices owing to the global financial crisis. According to IMF the GDP growth in 2010 is projected at around 2.5 percent, but a solid pick-up in the pace of growth is expected for 2011. Angola is still recovering from 27 years of nearly continuous warfare, and it remains beset by corruption and economic mismanagement. Despite abundant natural resources and rising per capita GDP, it was ranked 157 out of 179 countries on the 2008 UN Development Program's (UNDP) Human Development Index. Subsistence agriculture sustains one-third of the population.
The rapidly expanding petroleum industry reached its Organization of Petroleum Exporting Countries (OPEC) cap of 2 million barrels per day (bpd) in 2008. However, Angola’s production was cut to 1.51 million bpd in January 2009 by an OPEC mandate in response to plummeting oil prices. Throughout 2009, Angola never got down to its OPEC quota and produced an average of 1.8 million bpd. Angola is currently Africa’s largest oil producer, a position that Angola has traded places back and forth with Nigeria over the last year. Crude oil accounted for roughly 85% of GDP, 95% of exports, and 85% of government revenues in 2009. Angola also produces 40,000 bpd of locally refined oil. Oil production remains largely offshore and has few linkages with other sectors of the economy, though a local content initiative promulgated by the Angolan Government is pressuring oil companies to source from local businesses. The government is also pressuring oil companies to increase the number of Angolan staff.
Block 15, located offshore of Soyo, currently provides 30% of Angola's crude oil production. ExxonMobil, through its subsidiary Esso, is the operator, with a 40% share. In 2005, Block 15's second major sub-field, Kizomba B, came on line, producing about 250,000 bpd. BP, ENI-Agip, and Statoil are partners in the concession. Chevron operates Block 0, offshore of Cabinda, which provides about 20% of Angola's crude oil production. Its partners in Block 0 are Sonangol (the Angolan state oil company), TotalFinaElf, and ENI-Agip. In 2007, Block 0 had a total production of 370,000 bpd, and drilling activity continues at a high level. Chevron also operates Angola's first deepwater section to go into production, Block 14, which started pumping in January 2000 and produced 105,000 bpd in 2006.
TotalFinaElf brought the first Kwanza Basin deepwater blocks on line with production from its Block 17 concession that began in February 2002. Inauguration of the Dalia oilfield in December 2006 combined with the Girassol field already in operation brought Block 17's total production to approximately 500,000 bpd as of July 2007. Total expected to begin drilling in new oilfield Pazflor in 2009, bringing production to a peak of 700,000 bpd by 2011. Exploration is ongoing in ultra-deep water concessions and in deepwater and shallow concessions in the Namibe Basin. BP made the first significant ultra-deepwater find in its Block 31 concession in 2002 and had reached nine significant discoveries by the end of 2005. BP shipped its first crude from the Plutonio oilfield in Block 18 in 2007 and ultimately expects Plutonio to average 200,000 bpd in full production. Marathon also drilled a successful well in its Block 32 ultra-deep water concession. TotalFinaElf operates Angola's one refinery (in Luanda) for sole owner Sonangol; plans for a second refinery in Lobito with projected production of 200,000 bpd are moving forward, with KBR selected to do the front-end engineering and design work. There are plans to increase capacity of the Luanda refinery from 40,000 bpd to 100,000 bpd. Chevron, Sonangol, BP, Total, and Eni are developing a $4 billion to $5 billion liquefied natural gas plant at Soyo, now under construction by Bechtel, expected to start production in 2012.
Exports to Asian countries have grown rapidly in recent years, particularly to China. In late 2004, China's state oil company Sinopec entered the market, offering two separate $1 billion signing bonus offers on two offshore blocks. Sinopec has also formed a partnership with Sonangol to operate Block 3/05 (formerly Block 3/80), whose operation was transferred from Total to Sonangol. Sonangol will seek to expand its operation of onshore and shallow water blocks. This includes the northern block of Cabinda's onshore concessions, which since the reduction in hostilities with separatist forces is now open to exploration. Sonangol and Sinopec will also be eyeing future concession rounds, particularly for 23 blocks in the Kwanza Basin onshore area and the relinquished parts of Blocks 15, 17, and 18, currently operated by Exxon, Total, and BP. In 2008, Angola was China’s second-leading source country for crude oil by volume, importing 599 million barrels valued at U.S. $59.900 billion, up 19.3% year on year.
Diamonds make up most of Angola's remaining exports, with yearly production at 6 million carats. However, the financial crisis severely depressed diamond prices in 2009, sharply curtailing Angola’s diamond exports, and at one point forcing the state diamond authority, Endiama, to buy up production at cost for stockpiling to keep operators going. Diamond sales reached approximately $1.1 billion in 2006. Despite increased corporate ownership of diamond fields, much production is currently in the hands of small-scale prospectors, often operating illegally. Eight large-scale mines operate out of a total of 145 concessions. In June 2005, De Beers signed a $10 million prospecting contract with the government's diamond parastatal, ending a 4-year investment dispute between De Beers and the government. The government is making an increased effort to register and license prospectors. Legal sales of rough diamonds may occur only through the government's diamond-buying parastatal, although many producers continue to bypass the system to obtain higher prices. The government has established an export certification scheme consistent with the "Kimberley Process" to identify legitimate production and sales. Other mineral resources, including gold, remain largely undeveloped, though granite and marble quarrying has begun.
In the last decade of the colonial period, Angola was a major African agricultural exporter. Because of severe wartime conditions, including the massive dislocation of rural people and the extensive laying of landmines throughout the countryside, agricultural activities came to a near standstill, and the country now imports over half of its food. Small-scale agricultural production has increased several-fold over the last 5 years due to demining efforts, infrastructure improvements, and the ability of returnees and internally displaced persons (IDPs) to return safely to agricultural areas, yet production of most crops remains below 1974 levels. Some efforts at commercial agricultural recovery have gone forward, notably in fisheries and tropical fruits, but most of the country's vast potential remains untapped. Recently proposed land reform laws attempt to reconcile overlapping traditional land use rights, colonial-era land claims, and recent land grants to facilitate significant commercial agricultural development. However, the lack of clear title to land tracts and burdensome registration process in Angola continues to be a significant impediment to foreign investment in the agriculture sector.
An economic reform effort launched in 1998 was only marginally successful in addressing persistent fiscal mismanagement and corruption. In April 2000, Angola started an IMF staff-monitored program (SMP). The program lapsed in June 2001 over IMF concerns about lack of progress by Angola. Under the program, the Government of Angola did succeed in unifying exchange rates and moving fuel, electricity, and water prices closer to market rates. In March 2007, the government announced it was not interested in a formally structured IMF program, but would continue to participate in Article IV consultations and other technical assistance on an ad hoc basis. In November 2009, following increased Angolan efforts to make oil revenues more transparent, the IMF approved a 27-month Standby Arrangement (SBA) with Angola in the amount of approximately $1.4 billion to help the country cope with the effects of the global economic crisis. According to a statement released by the IMF, “While the immediate goal is to mitigate the repercussions of the adverse terms of trade shocks linked to the global crisis, the program also includes a reform agenda aimed at medium-term structural issues to foster non-oil sector growth.” The loan is the largest IMF financing package to date for a sub-Saharan African country during the current global crisis.
In December 2002, President dos Santos named a new economic team to oversee homegrown reform efforts. The new team succeeded in decreasing overall government spending, rationalizing the Kwanza exchange rate, closing regulatory loopholes that allowed off-budget expenditures, and capturing all revenues in the state budget. New procedures were implemented to track the flow of funds among the Treasury, Banco Nacional de Angola (the central bank), and the state-owned Banco de Poupança e Credito, which operates the budget. The Angolan Government adopted a new investment code. Concerns remain about quasi-fiscal operations by the state oil company Sonangol, opaque oil-backed concessionary lines of credit that operate outside the budget process, inadequate transparency, oversight in the management of public accounts, and the lack of supervision of the commercial banking sector. A recent Financial Action Task Force on Money Laundering (FATF) report cited Angola for a significant lack of laws and regulations regarding anti-money laundering and counterterrorist financing (AML/CFT). The Angolan commercial code, financial sector law, and telecommunications law all require substantial revision.
Angola is the second-largest trading partner of the United States in sub-Saharan Africa, mainly because of its petroleum exports. U.S. exports to Angola primarily consist of industrial goods and services--such as oilfield equipment, mining equipment, chemicals, aircraft, and food. On December 30, 2003, President George W. Bush approved the designation of Angola as eligible for tariff preferences under the African Growth and Opportunity Act (AGOA).
2 CIA summary: https://www.cia.gov/library/publications/the-world-factbook/geos/ao.html
3 World Bank: Angola at a glance, http://devdata.worldbank.org/AAG/ago_aag.pdf
4 World Bank: costs of doing business in Angola, http://www.doingbusiness.org/data/exploreeconomies/angola. Here you can see costs for all of these (downloadable as Excel sheet):
Starting a Business
Dealing with Construction Permits
Registering Property
Getting Credit
Protecting Investors
Paying Taxes
Trading Across Borders
Enforcing Contracts
Closing a Business
---
Employees:
Difficulty of hiring
Rigidity of hours
Difficulty of redundancy
Redundancy costs (weeks of salary)
1 US State Dept: Angola Briefing: http://www.state.gov/p/af/ci/ao/index.htm.
Economy:
Despite a fast-growing economy largely due to a major oil boom, Angola ranks in the bottom 10% of most socioeconomic indicators. The International Monetary Fund (IMF) estimates that Angola's real GDP increased by 16% in 2008. However, GDP growth in 2009 was flat due to significantly lower oil prices owing to the global financial crisis. According to IMF the GDP growth in 2010 is projected at around 2.5 percent, but a solid pick-up in the pace of growth is expected for 2011. Angola is still recovering from 27 years of nearly continuous warfare, and it remains beset by corruption and economic mismanagement. Despite abundant natural resources and rising per capita GDP, it was ranked 157 out of 179 countries on the 2008 UN Development Program's (UNDP) Human Development Index. Subsistence agriculture sustains one-third of the population.
The rapidly expanding petroleum industry reached its Organization of Petroleum Exporting Countries (OPEC) cap of 2 million barrels per day (bpd) in 2008. However, Angola’s production was cut to 1.51 million bpd in January 2009 by an OPEC mandate in response to plummeting oil prices. Throughout 2009, Angola never got down to its OPEC quota and produced an average of 1.8 million bpd. Angola is currently Africa’s largest oil producer, a position that Angola has traded places back and forth with Nigeria over the last year. Crude oil accounted for roughly 85% of GDP, 95% of exports, and 85% of government revenues in 2009. Angola also produces 40,000 bpd of locally refined oil. Oil production remains largely offshore and has few linkages with other sectors of the economy, though a local content initiative promulgated by the Angolan Government is pressuring oil companies to source from local businesses. The government is also pressuring oil companies to increase the number of Angolan staff.
Block 15, located offshore of Soyo, currently provides 30% of Angola's crude oil production. ExxonMobil, through its subsidiary Esso, is the operator, with a 40% share. In 2005, Block 15's second major sub-field, Kizomba B, came on line, producing about 250,000 bpd. BP, ENI-Agip, and Statoil are partners in the concession. Chevron operates Block 0, offshore of Cabinda, which provides about 20% of Angola's crude oil production. Its partners in Block 0 are Sonangol (the Angolan state oil company), TotalFinaElf, and ENI-Agip. In 2007, Block 0 had a total production of 370,000 bpd, and drilling activity continues at a high level. Chevron also operates Angola's first deepwater section to go into production, Block 14, which started pumping in January 2000 and produced 105,000 bpd in 2006.
TotalFinaElf brought the first Kwanza Basin deepwater blocks on line with production from its Block 17 concession that began in February 2002. Inauguration of the Dalia oilfield in December 2006 combined with the Girassol field already in operation brought Block 17's total production to approximately 500,000 bpd as of July 2007. Total expected to begin drilling in new oilfield Pazflor in 2009, bringing production to a peak of 700,000 bpd by 2011. Exploration is ongoing in ultra-deep water concessions and in deepwater and shallow concessions in the Namibe Basin. BP made the first significant ultra-deepwater find in its Block 31 concession in 2002 and had reached nine significant discoveries by the end of 2005. BP shipped its first crude from the Plutonio oilfield in Block 18 in 2007 and ultimately expects Plutonio to average 200,000 bpd in full production. Marathon also drilled a successful well in its Block 32 ultra-deep water concession. TotalFinaElf operates Angola's one refinery (in Luanda) for sole owner Sonangol; plans for a second refinery in Lobito with projected production of 200,000 bpd are moving forward, with KBR selected to do the front-end engineering and design work. There are plans to increase capacity of the Luanda refinery from 40,000 bpd to 100,000 bpd. Chevron, Sonangol, BP, Total, and Eni are developing a $4 billion to $5 billion liquefied natural gas plant at Soyo, now under construction by Bechtel, expected to start production in 2012.
Exports to Asian countries have grown rapidly in recent years, particularly to China. In late 2004, China's state oil company Sinopec entered the market, offering two separate $1 billion signing bonus offers on two offshore blocks. Sinopec has also formed a partnership with Sonangol to operate Block 3/05 (formerly Block 3/80), whose operation was transferred from Total to Sonangol. Sonangol will seek to expand its operation of onshore and shallow water blocks. This includes the northern block of Cabinda's onshore concessions, which since the reduction in hostilities with separatist forces is now open to exploration. Sonangol and Sinopec will also be eyeing future concession rounds, particularly for 23 blocks in the Kwanza Basin onshore area and the relinquished parts of Blocks 15, 17, and 18, currently operated by Exxon, Total, and BP. In 2008, Angola was China’s second-leading source country for crude oil by volume, importing 599 million barrels valued at U.S. $59.900 billion, up 19.3% year on year.
Diamonds make up most of Angola's remaining exports, with yearly production at 6 million carats. However, the financial crisis severely depressed diamond prices in 2009, sharply curtailing Angola’s diamond exports, and at one point forcing the state diamond authority, Endiama, to buy up production at cost for stockpiling to keep operators going. Diamond sales reached approximately $1.1 billion in 2006. Despite increased corporate ownership of diamond fields, much production is currently in the hands of small-scale prospectors, often operating illegally. Eight large-scale mines operate out of a total of 145 concessions. In June 2005, De Beers signed a $10 million prospecting contract with the government's diamond parastatal, ending a 4-year investment dispute between De Beers and the government. The government is making an increased effort to register and license prospectors. Legal sales of rough diamonds may occur only through the government's diamond-buying parastatal, although many producers continue to bypass the system to obtain higher prices. The government has established an export certification scheme consistent with the "Kimberley Process" to identify legitimate production and sales. Other mineral resources, including gold, remain largely undeveloped, though granite and marble quarrying has begun.
In the last decade of the colonial period, Angola was a major African agricultural exporter. Because of severe wartime conditions, including the massive dislocation of rural people and the extensive laying of landmines throughout the countryside, agricultural activities came to a near standstill, and the country now imports over half of its food. Small-scale agricultural production has increased several-fold over the last 5 years due to demining efforts, infrastructure improvements, and the ability of returnees and internally displaced persons (IDPs) to return safely to agricultural areas, yet production of most crops remains below 1974 levels. Some efforts at commercial agricultural recovery have gone forward, notably in fisheries and tropical fruits, but most of the country's vast potential remains untapped. Recently proposed land reform laws attempt to reconcile overlapping traditional land use rights, colonial-era land claims, and recent land grants to facilitate significant commercial agricultural development. However, the lack of clear title to land tracts and burdensome registration process in Angola continues to be a significant impediment to foreign investment in the agriculture sector.
An economic reform effort launched in 1998 was only marginally successful in addressing persistent fiscal mismanagement and corruption. In April 2000, Angola started an IMF staff-monitored program (SMP). The program lapsed in June 2001 over IMF concerns about lack of progress by Angola. Under the program, the Government of Angola did succeed in unifying exchange rates and moving fuel, electricity, and water prices closer to market rates. In March 2007, the government announced it was not interested in a formally structured IMF program, but would continue to participate in Article IV consultations and other technical assistance on an ad hoc basis. In November 2009, following increased Angolan efforts to make oil revenues more transparent, the IMF approved a 27-month Standby Arrangement (SBA) with Angola in the amount of approximately $1.4 billion to help the country cope with the effects of the global economic crisis. According to a statement released by the IMF, “While the immediate goal is to mitigate the repercussions of the adverse terms of trade shocks linked to the global crisis, the program also includes a reform agenda aimed at medium-term structural issues to foster non-oil sector growth.” The loan is the largest IMF financing package to date for a sub-Saharan African country during the current global crisis.
In December 2002, President dos Santos named a new economic team to oversee homegrown reform efforts. The new team succeeded in decreasing overall government spending, rationalizing the Kwanza exchange rate, closing regulatory loopholes that allowed off-budget expenditures, and capturing all revenues in the state budget. New procedures were implemented to track the flow of funds among the Treasury, Banco Nacional de Angola (the central bank), and the state-owned Banco de Poupança e Credito, which operates the budget. The Angolan Government adopted a new investment code. Concerns remain about quasi-fiscal operations by the state oil company Sonangol, opaque oil-backed concessionary lines of credit that operate outside the budget process, inadequate transparency, oversight in the management of public accounts, and the lack of supervision of the commercial banking sector. A recent Financial Action Task Force on Money Laundering (FATF) report cited Angola for a significant lack of laws and regulations regarding anti-money laundering and counterterrorist financing (AML/CFT). The Angolan commercial code, financial sector law, and telecommunications law all require substantial revision.
Angola is the second-largest trading partner of the United States in sub-Saharan Africa, mainly because of its petroleum exports. U.S. exports to Angola primarily consist of industrial goods and services--such as oilfield equipment, mining equipment, chemicals, aircraft, and food. On December 30, 2003, President George W. Bush approved the designation of Angola as eligible for tariff preferences under the African Growth and Opportunity Act (AGOA).
2 CIA summary: https://www.cia.gov/library/publications/the-world-factbook/geos/ao.html
3 World Bank: Angola at a glance, http://devdata.worldbank.org/AAG/ago_aag.pdf
4 World Bank: costs of doing business in Angola, http://www.doingbusiness.org/data/exploreeconomies/angola. Here you can see costs for all of these (downloadable as Excel sheet):
Starting a Business
Dealing with Construction Permits
Registering Property
Getting Credit
Protecting Investors
Paying Taxes
Trading Across Borders
Enforcing Contracts
Closing a Business
---
Employees:
Difficulty of hiring
Rigidity of hours
Difficulty of redundancy
Redundancy costs (weeks of salary)
Monday, January 31, 2011
The Two Likeliest Political Outcomes for Mubarak
The Two Likeliest Political Outcomes for Mubarak. By Stephen J. Hadley
Egyptian society needs time to prepare for free elections and to remediate years of government oppression.
WSJ, Jan 31, 2011
http://online.wsj.com/article/SB10001424052748703833204576114252976824050.html
All eyes are now on Egypt and an Obama administration struggling to find its footing. The truth is that once revolutionary fervor emerges and a situation descends into crisis, any administration is largely hostage to events and the dilemmas are acute. Do we desert a longstanding ally, only to raise doubts about our staying power in the minds of other longstanding allies? Do we remain loyal to a longstanding ally even after he has clearly lost public support, only to alienate a people struggling to win their freedom? In the midst of a crisis like this, the options are few.
Before the current crisis, there were good options. They were urged on the Egyptian government by a series of American administrations—including especially the administration of George W. Bush, in which I served. The United States pressed President Hosni Mubarak publicly and privately to encourage the emergence of non-Islamist political parties. Our calls for action were generally ignored and non- Islamist parties were persecuted and suppressed.
The result was a political landscape that offered the Egyptian people just two choices: the government party (the National Democratic Party or NDP) and the underground Islamist Muslim Brotherhood. This sad outcome was President Mubarak's own creation. He did it in part so that he could argue to successive U.S. administrations and his own people that the only alternative to his rule was an Islamist state. But it didn't have to be this way.
Some critics argue that no U.S. administration went far enough in pressing President Mubarak—including the administrations in which I served. As important as the "freedom agenda" was to President Bush, there were other issues—terrorism, proliferation, the Israeli-Palestinian conflict, to name a few—that required us to deal with the Egyptian government. Perhaps as important, the Egyptians are a proud people. No nation wants to be seen to be giving in to public pressure from another state—even a close ally. In the end, the decision was President Mubarak's. He made it, and he is now facing the consequences.
At present, the two most probable outcomes of the current crisis are a lame-duck Mubarak administration or a Mubarak departure from power in favor of a transitional government backed by the Egyptian military.
Under the first outcome, President Mubarak rides out the current crisis. Presidential elections are expected in September of this year. It seems unlikely that either President Mubarak or his son Gamal will conclude that under current circumstances they can run and win. That will leave President Mubarak presiding over a lame-duck administration. The issue will be whether he seeks to transfer power to another authoritarian strongman backed by the army or dramatically changes course and uses the upcoming presidential election to create a democratic transition for his country.
The precedents for this latter outcome are few but not nonexistent. It is essentially the role that the Bush administration urged on Pakistani President Pervez Musharraf, which he played successfully in 2008. The resulting government is admittedly a weak one that continues to cause the U.S. real problems in Afghanistan. But it is a democratic government, and by its coming to power we avoided the kind of Islamist regime that followed the fall of the Shah of Iran and that has provoked three decades of serious confrontation with the U.S. and totalitarian oppression of the Iranian people.
Under the second outcome, President Mubarak surrenders power and is replaced by a transitional government supported by the Egyptian military. The presidential elections then become the vehicle for transferring power to a government whose legitimacy comes from the people.
Either way, Egyptian society needs time to prepare for these elections and to begin to remediate the effects of years of government oppression. The Egyptian people should not have to choose only between the government-backed NDP and the Islamist Muslim Brotherhood. Non-Islamist parties need an opportunity to emerge to fill in the intervening political space. Time is short even if the presidential elections go forward as expected in September. The U.S. should resist the temptation to press for an accelerated election schedule. Hopefully wise heads in Egypt will do the same.
Time and a full array of political alternatives are critical in the upcoming presidential election and the parliamentary elections that undoubtedly will follow. If given an array of choices, I believe that the Egyptian people will choose a democratic future of freedom and not an Islamist future of imposed extremism. While the Muslim Brotherhood, if legalized, would certainly win seats in a new parliament, there is every likelihood that the next Egyptian government will not be a Muslim Brotherhood government but a non-Islamist one committed to building a free and democratic Egypt.
Such a government would still pose real challenges to U.S. policy in many areas. But with all eyes in the region on Egypt, it would be a good outcome nonetheless. With a large population and rich cultural heritage, Egypt has always been a leader in the Middle East. Now it has the opportunity to become what it always should have been—the leader of a movement toward freedom and democracy in the Arab world.
Mr. Hadley was national security adviser to President George W. Bush.
Egyptian society needs time to prepare for free elections and to remediate years of government oppression.
WSJ, Jan 31, 2011
http://online.wsj.com/article/SB10001424052748703833204576114252976824050.html
All eyes are now on Egypt and an Obama administration struggling to find its footing. The truth is that once revolutionary fervor emerges and a situation descends into crisis, any administration is largely hostage to events and the dilemmas are acute. Do we desert a longstanding ally, only to raise doubts about our staying power in the minds of other longstanding allies? Do we remain loyal to a longstanding ally even after he has clearly lost public support, only to alienate a people struggling to win their freedom? In the midst of a crisis like this, the options are few.
Before the current crisis, there were good options. They were urged on the Egyptian government by a series of American administrations—including especially the administration of George W. Bush, in which I served. The United States pressed President Hosni Mubarak publicly and privately to encourage the emergence of non-Islamist political parties. Our calls for action were generally ignored and non- Islamist parties were persecuted and suppressed.
The result was a political landscape that offered the Egyptian people just two choices: the government party (the National Democratic Party or NDP) and the underground Islamist Muslim Brotherhood. This sad outcome was President Mubarak's own creation. He did it in part so that he could argue to successive U.S. administrations and his own people that the only alternative to his rule was an Islamist state. But it didn't have to be this way.
Some critics argue that no U.S. administration went far enough in pressing President Mubarak—including the administrations in which I served. As important as the "freedom agenda" was to President Bush, there were other issues—terrorism, proliferation, the Israeli-Palestinian conflict, to name a few—that required us to deal with the Egyptian government. Perhaps as important, the Egyptians are a proud people. No nation wants to be seen to be giving in to public pressure from another state—even a close ally. In the end, the decision was President Mubarak's. He made it, and he is now facing the consequences.
At present, the two most probable outcomes of the current crisis are a lame-duck Mubarak administration or a Mubarak departure from power in favor of a transitional government backed by the Egyptian military.
Under the first outcome, President Mubarak rides out the current crisis. Presidential elections are expected in September of this year. It seems unlikely that either President Mubarak or his son Gamal will conclude that under current circumstances they can run and win. That will leave President Mubarak presiding over a lame-duck administration. The issue will be whether he seeks to transfer power to another authoritarian strongman backed by the army or dramatically changes course and uses the upcoming presidential election to create a democratic transition for his country.
The precedents for this latter outcome are few but not nonexistent. It is essentially the role that the Bush administration urged on Pakistani President Pervez Musharraf, which he played successfully in 2008. The resulting government is admittedly a weak one that continues to cause the U.S. real problems in Afghanistan. But it is a democratic government, and by its coming to power we avoided the kind of Islamist regime that followed the fall of the Shah of Iran and that has provoked three decades of serious confrontation with the U.S. and totalitarian oppression of the Iranian people.
Under the second outcome, President Mubarak surrenders power and is replaced by a transitional government supported by the Egyptian military. The presidential elections then become the vehicle for transferring power to a government whose legitimacy comes from the people.
Either way, Egyptian society needs time to prepare for these elections and to begin to remediate the effects of years of government oppression. The Egyptian people should not have to choose only between the government-backed NDP and the Islamist Muslim Brotherhood. Non-Islamist parties need an opportunity to emerge to fill in the intervening political space. Time is short even if the presidential elections go forward as expected in September. The U.S. should resist the temptation to press for an accelerated election schedule. Hopefully wise heads in Egypt will do the same.
Time and a full array of political alternatives are critical in the upcoming presidential election and the parliamentary elections that undoubtedly will follow. If given an array of choices, I believe that the Egyptian people will choose a democratic future of freedom and not an Islamist future of imposed extremism. While the Muslim Brotherhood, if legalized, would certainly win seats in a new parliament, there is every likelihood that the next Egyptian government will not be a Muslim Brotherhood government but a non-Islamist one committed to building a free and democratic Egypt.
Such a government would still pose real challenges to U.S. policy in many areas. But with all eyes in the region on Egypt, it would be a good outcome nonetheless. With a large population and rich cultural heritage, Egypt has always been a leader in the Middle East. Now it has the opportunity to become what it always should have been—the leader of a movement toward freedom and democracy in the Arab world.
Mr. Hadley was national security adviser to President George W. Bush.
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